Cliometrics and Cliodynamics

This blog has mused about historical and social trends. In particular, how can those trends be understood or predicted

Two academic fields have emerged -- cliometrics and cliodynamics.

Both fields start with economic history but now look to widen their study.

Milk prices

Milk prices are rising in the US.  Prices have climbed to nearly the 2011 highs.

Why the price increase?

Some of the higher prices stem from higher feed prices and smaller herds.

But another important trend is that China is now the world's largest dairy importer and its buying is affecting US milk prices.  Dairy prices could continue to rise in 2014 as Chinese imports more.

Who benefits? Dairy farmers in California are the biggest immediate beneficiaries.  They have been squeezed by high cattle feed prices due to drought conditions over the past year.

Investmet buying of foreclosed housing

Since the bottom of the subprime crisis, some big institutional investors have been buying foreclosed houses to convert them into rentals. Institutional investors have 100s of thousand homes in the past five years.

But, is the big wave of buying over?

The biggest buyers -- Blackstone Group, American Homes 4 Rent, and Colony American Homes -- appear to have slowed their buying.  Instead of buying across the country, they are still buying but mainly in selected regions in lat 2013.

Perhaps the slow-down is due to higher prices.  But some states are completing foreclosure proceedings with the start of a new year as shown in monthly statistics from January 2014.

CBO says minimum wage hike = job losses

The CBO just came out with a document on the effects of a minimum wage increase. The CBO's conclusions is that 16.5 million would get a higher wage but 1/2 million would lose their job.

I'm surprised that news reports are surprised. The evidence is clear that minimum wage increases cause job losses.

The best overview is this book where its authors conclude that minimum wages hurt the poor.

A more recent study in 2010 (and follow-up column) shows the effect of the last increase in 2009 resulted in 100s of thousands of lost part-time jobs:

A 2012 research paper looks at claims of no job losses from higher minimum
wages and found that those claims used poor techniques:

A minimum wage is a clear example of a government distortion that causes
unintended and negative side effects.  For example, unemployment didn't
get really bad until several years after 1929 stock market crash. The "trickle

down" phrase originally meant that high union wages helped other workers.

Google's sale of Motorola -- profit or loss?

There's a flurry of articles about Google's sale of Motorola. For example:

this report gives the broad details on the deal with Lenovo.

Most articles are negative, concluding with a "buy high, sell low" message.

In contrast, I think the deal was good for Google. My calculations:

•  purchase = $12.5B
•  Motorola cash+investments = $5B
•  sale of Motorola set-top division = $2.4B
•  sale of Motorola handset division = $2.9B

That equates to: 12.5 - (5+2.4+2.9) = $2.2B total cost

This columnist came to a similar conclusion but estimates a total cost of $3.2B.

There were probably other tax-loss benefits and some R&D credits to help Google.  They might be offset by about $1B in losses for running the money-losing company for about two years.  Motorola lost $100-200M/quarter on the handset business.

If the patent portfolio is worth over $2-3 billion, then Google comes out ahead on the whole deal.

Google may even show a profit if tax losses from Motorola are realized.
These might be worth $6.5B spread over the next half-decade.

resident vs citizen

Will a two-tier citizen system emerge?
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With the current Congressional debate over aliens living in the US, will the notion of citizenship change?
For example, could a person legally live in the US without being a citizen?  Today that is allowed with "green cards", student visas, guest worker permits, and other exemptions.
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But there are many people -- maybe as many as 10 million -- that reside in the US illegally without having a legal permit.  What should be done with them?
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Maybe Congress will move to a two level system.  Citizens have all rights and protections. Residents have the protections of living in the country but do not have all privileges.
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If such a 2-class system is established, what happens to citizens that lose privileges or rights?  For example, convicted criminals lose the right to own firearms, vote,  the right to live in certain locations, or the right to hold certain jobs. Are these people still citizens?

Abenomics after 1 year

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It's the end of the first year of Abenomics.  Prime Minister Shinzo Abe won election in December, 2012.
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Abe introduced several measures to help Japan's poor economy and battle deflation.  Under Abe, the Bank of Japan in January set its inflation target to 2%.
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So far the results are mixed.  While the risk of deflation looks lower, the main effect has been in the value of its currency.  The yen has weakened against the dollar by about 20% in 2013 and is likely to continue weakening in 2014.  Japan may be fixing its deflation internally by exporting deflation.
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There are many unanswered questions about Japan:

• what effect will its shrinking population have on the economy?
• how coupled is Japan's economy with China's?
• will Japan's economy grow?
• how will Japan's huge debt level (over 200% of GDP) be resolved?